MarketsFarm — As canola remained steadfast in its following of Chicago soyoil, analyst Wayne Palmer of Exceed Grain stressed that the days of higher prices have very likely passed.
“Farmers are tremendously undersold. This latest sell off took them totally by surprise,” he said.
After August soyoil made some gains over the last week, it closed on Wednesday at exactly 59 U.S. cents per pound.
During the same time the November canola contract stood at C$825.30 per tonne a week ago, then increased a little, and then finished a week later at C$829.90.
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Palmer stressed that oilseed prices, including canola, are likely to further erode in the coming weeks, with good development on the Prairies weighing on values thanks to ideal growing condition. But he warned the crop remained dependent on the level of export demand and the coming weather.
Over the last week, crop reports from the Prairie provinces said canola that was seeded later because of wet conditions suffered damage from flea beetles. However, the great majority of the crop was doing quite well — including canola that had been reseeded.
“[Farmers] say they will sell it the next time it goes up. There may not be a next time when we get $900 November canola,” the analyst said. “They got mad because they didn’t sell it for $25-$30 per bushel, now they’re going to be mad because they didn’t sell it for $20.”
Palmer also said buyers from China saw the huge spike in canola coming and bought as much as they could before prices became too expensive.
“Then the funds came in and went long. Now China is nowhere to be seen and prices are going down,” he said, noting those funds are among the biggest sellers.
— Glen Hallick reports for MarketsFarm from Winnipeg.
